Gold And Other Markets In Need Of Direction

We are in the midst of a strange week in the world of economic news and other broad impulses in markets. Chief in our mind is the concern over where equities earnings are headed. Second, we have to ask where oil is headed. Both, in different ways are contingent on U.S. dollar strength.

Wednesday afternoon the Fed will be releasing the minutes of last month’s FOMC meeting, always a curious event: a) because the news is three to four weeks old and b) because the other intra- and extramural commentaries by the Fed and its freelancing members has already spun the markets this way and that.

Nevertheless, analysts and investors will be examining the entrails of the minutes to see if there is some secret message. We don’t think there will be, but we can’t predict reactions to what people believe might be there between the lines.

The employment picture, which suffered a body blow in March regarding new jobs that were created, took an interesting turn today.

The Job Openings and Labor Turnover Survey (called JOLTS) showed there were 5.1 million job openings on the last business day of February, the highest since January 2001 but little changed from the prior month, the U.S. Bureau of Labor Statistics reported today.

Quits and hires declined slightly, statistically meaningless when compared to January figures.

We wonder if this high number for February represents something portentous for the American economy. As Baby Boomers retire and Millennials increasingly go their own independent way, are we facing a labor shortage? While employers say they are being fussier over new hires, 5.1 million fussbudget non-hires seems like an enormous number. Are we under-training our workforce? Are employers no longer willing to train labor force entrants? Are those real openings or just trial balloons floated to draw the most highly skilled workers in a category from their current job to a new position?

It certainly can’t be helping growth, one way or another.

The euro is down close to a full 1% against the dollar. The yen is off 0.75%. The British pound is holding steadier.

That has led to gold’s decline. Taking only regular trading into account, the yellow precious metal would have been up $5.00, but the dollar is dragging prices down by $9.70, resulting in an overall loss of around $4.70. Silver is off about 0.75% on the day, mostly due to dollar strength. (Prices at 4PM, New York time.)

Oil shrugged off dollar concerns to rise significantly. West Texas Intermediate is up over 3% while Brent North Sea is up 1.3% on the day. We think, however, that WTI oil has a natural ceiling around $60 per barrel because as soon as the price rises near that level, more U.S. pumping will kick in and drive the price back down.

The rise in oil helped buoy stocks today, boosting energy components of the Dow and S&P.

Gold needs some fundamentals direction – as a haven, as an inflation hedge, as something to have and to hold. Where that will come from and when is anyone’s guess.

Wishing you as always, good trading,